latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/nisource-s-top-sierra-club-grade-shows-action-matters-more-than-net-zero-pledges-72106669 content esgSubNav
In This List

NiSource's top Sierra Club grade shows action matters more than net-zero pledges

Blog

Insight Weekly: Energy crisis cripples Europe; i-bank incomes rise; US holiday sales outlook

Blog

Japan M&A By the Numbers: Q3 2022

Blog

Insight Weekly: Reviving nuclear power; 2023 outlook for US financials; PE funds fuel EV sector

Podcast

Energy Evolution | A skills shortage imperils the global energy transition


NiSource's top Sierra Club grade shows action matters more than net-zero pledges

SNL Image

American Electric Power hopes to extend the life of its John Ames coal plant in West Virginia until 2040. The path to net-zero emissions by 2050 "is less certain," AEP says in its 2022 sustainability plan.
Source: Joe Sohm/Getty Images News via Getty Images

Only three of the largest U.S. utility parent companies lack an official net-zero emissions target, including NiSource Inc. And yet, the Indiana-based power and natural gas provider was the only company to earn an "A" in the Sierra Club's second edition of a report lamenting the industry's progress on clean energy.

Some utility decarbonization observers said such results show that net-zero pledges are meaningless unless they are backed up by a doable plan for how to achieve that result.

Since S&P Global Commodity Insights published its latest utility survey in June, NextEra Energy Inc. announced what it described as a real zero goal leaving just NiSource, Atmos Energy Corp. and OGE Energy Corp. in the no net-zero pledge club among the nation's 30 largest utilities by market cap.

"You can view the net-zero goals with a great deal of skepticism unless they're paired with specific plans, actions and milestones that show how the utility is actually going to reduce emissions," Mike O'Boyle, electricity director at the Energy Innovation think tank, said in an interview. "It reflects a dynamic where these goals are not yet integrated into company culture. When you dive into the details of how the utility actually builds and operates the power system and plans to do so, you're not seeing the uptake of new technology that's in line with the stated goals."

NiSource says it is on track to reduce greenhouse gas emissions by 90% from 2005 levels by 2030, in line with what is required to meet the goals of the Paris Agreement on climate change. That means the company is ahead of other utilities, some of which have ambitious net-zero goals but less to show for it, the Sierra Club's analysis concluded.

"We have already reduced greenhouse gas emissions from our operations by 58% on our way to our [2030] goal," Kelly Carmichael, NiSource's vice president of environmental policy, said in a statement. "As our strategy continues to evolve, we are excited about the opportunity to provide a diverse mix of reliable and more sustainable energy at a lower cost to our customers."

The Sierra Club report, The Dirty Truth About Utility Climate Pledges, funded in part by Bloomberg Philanthropies, said 70% of the 77 utility operating and parent companies it scrutinized earned a D or an F grade. Among utilities earning bottom grades were Duke Energy Corp., FirstEnergy Corp. Southern Co. and the Tennessee Valley Authority.

The Sierra Club analysis was particularly focused on coal plant retirements, new clean energy generation and whether or not utilities were avoiding building new natural gas-fired plants.

"Rhetorical climate goals only serve to mislead customers and investors," Holly Bender, the Sierra Club's senior director of energy campaigns, wrote in an email. "In order for a utility to have a meaningful climate goal, the goal must apply to all subsidiary companies, include regular interim targets and provide regular updates and a comprehensive plan for how the target will be achieved, backed by concrete [Integrated Resource Plan] commitments."

Leah Stokes, a professor at the University of California, Santa Barbara, and co-author of the report, added: "Boasting an 'aspirational' net-zero by 2050 target that in no way affects a utility's planning or actions is greenwashing."

As it did a year earlier when the Sierra Club's first benchmarking report was published, the Edison Electric Institute questioned the validity of the assessment.

"The Sierra Club's metrics are as arbitrary as they were last year when they first released this messaging document," Brian Reil, a spokesperson for the industry trade group, wrote in an email. "The reality is that existing nuclear generation and the flexibility provided by natural gas generation are what enabled the U.S. electric power industry to deploy 27 gigawatts of new renewables, reliably and cost-effectively, last year."

The emission-reduction goals that investor-owned utilities set reflect "our current understanding of technology and economics," Reil wrote, asserting that more than 40% of the nation's energy is now generated by carbon-free resources.

Duke Energy on Oct. 4 announced that it would boost its capital investments by $10 billion to $145 billion over the next decade. Of that, $40 billion will be spent on solar, wind, batteries and extending Duke's nuclear fleet.

"Our customers' expectations are clear — they want affordability and reliability to remain a central focus as we work to achieve net-zero carbon emissions by 2050," Lynn Good, the utility's CEO, said in a statement.

A challenge utilities are 'well equipped to solve'

The Sierra Club analysis found that over the last 18 months, most utilities still have not created a pathway to achieving 80% clean electricity by 2030. Nearly half of the 77 utilities in the study made no progress or received a lower score than in 2021, the report said.

The utility industry is rightfully a conservative, safety- and reliability-oriented industry, Energy Innovation's O'Boyle said. "But what they're really, really good at as well is building new infrastructure and investing capital, that's what their business model has been for the last century. And what they're being asked to do is just that, to build sufficient infrastructure to deal with the climate crisis."

"This is essentially a giant infrastructure and engineering problem that electric utilities are well equipped to solve," O'Boyle continued. "So the question is, why isn't everybody moving in the same direction as NiSource?"

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.